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b. Compute Grant’s accounts receivable turnover for the year, assuming the
receivables are sold. Discuss how factoring of receivables affects the turnover
ratio.
*E7.22 (LO 6) (Petty Cash) McMann, Inc. decided to establish a petty cash fund to
help ensure internal control over its small cash expenditures. The following
information is available for the month of April.
The petty cash fund was replenished on April 10. The balance in the fund was $12.
3. The petty cash fund balance was increased $100 to $300 on April 20.
Instructions
Prepare the journal entries to record transactions related to petty cash for the month
of April.
*E7.23 (LO 6) (Petty Cash) The petty cash fund of Teasdale’s Auto Repair Service, a
sole proprietorship, contains the following.
1. Coins and currency $ 10.20
2. Postage stamps 7.90
3. An I.O.U. from Richie Cunningham, an employee, for cash 40.00
advance
4. Check payable to Teasdale’s Auto Repair from Pottsie Weber, an 34.00
employee, marked NSF
5. Vouchers for the following:
Stamps $ 20.00
Two Premier Cup tickets for Nick Teasdale 170.00
Printer cleaning 14.35 204.35
$296.45
The general ledger account Petty Cash has a balance of $300.
Instructions
Prepare the journal entry to record the reimbursement of the petty cash fund.
*E7.24 (LO 6) (Bank Reconciliation and Adjusting Entries) Kipling plc
deposits all receipts and makes all payments by check. The following information is
available from the cash records.
June 30 Bank Reconciliation
Balance per bank £7,000
Add: Deposits in transit 1,540
Deduct: Outstanding checks 2,000
Balance per books £6,540
a. Prepare a bank reconciliation going from balance per bank and balance per book
to correct the cash balance.
b. Prepare the general journal entry or entries to correct the Cash account.